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LABOR AND EMPLOYMENT SEMINAR

OCTOBER 15, 2015

National Labor Relations Bored?! NOT!

Julianne Story and Robert Rojas Materials: Alyssa Gonnerman

I. INTRODUCTION

While some private non-union employers may find news about the National Labor Relations Board (“NLRB” or “Board”) in 2015 to be irrelevant or less than exciting, failing to pay attention to key decisions and guidance the NLRB issued this year could leave the “sleepy” employer at risk. Although the NLRB has traditionally been considered relevant only to unionized work environments or union activity, the NLRB’s recent decisions and guidance will likely have a significant impact on non-unionized employers. Some of the NLRB’s most contested and far-reaching rulings and guidance from this past year include:

• Browning Ferris Industries of California, Inc.: The New Joint Employer Standard • Purple Communications, Inc.: Use of Employer Email Systems • The Final Rule: Quickie Union Elections • Regulating Employee Conduct

The full extent of the impact of these actions is still unknown, but both union and non-union employers should pay close attention as these issues continue to develop. It is obvious the NLRB’s agenda is to encourage unionization and increase employee protections -- at the expense of employers. These recent decisions and guidance also reflect a continuing trend on the part of the Board to regulate employment policies and management decisions of non-union private sector employers.

II. THE NATIONAL LABOR RELATIONS ACT

The NLRB is the judicial body charged with resolving disputes under the National Labor Relations Act (“NLRA” or the “Act”). The Act, passed by Congress and signed into law in 1935 by President Franklin Roosevelt, was enacted to encourage the process of unionization and collective bargaining and protect employee rights. The relevant sections of the Act, commonly referred to as Sections 7 and 8, provide:

Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection. 29 U.S.C. § 157 (“Section 7”) (emphasis added).

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It shall be an unfair labor practice for an employer . . . to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section 157 [Section 7]. 29 U.S.C. § 158(a)(1) (“Section 8”).

Section 7 describes the broad range of employee activities protected by the Act while Section 8 safeguards an employee’s right to engage in those activities, making it unlawful for an employer to interfere with those rights. While these sections of the Act have traditionally regulated employers who interfere with the union process in some way, the Board has more recently applied them to limit an employer’s business and management practices outside the union contest.

III. THE NEW JOINT EMPLOYER STANDARD

In a 3-2 decision on August 27, 2015, the NLRB issued its decision in Browning-Ferris Industries of California, Inc. (“Browning-Ferris”), which has left many employers puzzled about the extent to which this decision will affect their relationships with contractors, franchisees, or other contingent and temporary workers. Now, entities could find themselves qualified as “employers” of employees over whom they have never exercised control. Because it is so recent, the full impact of the decision is still unknown. However, the NLRB’s rationale in constructing the new joint employer standard provides employers with some insight as to how the decision may affect their businesses.

A. What Is A “Joint Employer”?

A “joint employer” consists of two independent legal entities that have chosen to share responsibility for various aspects of the employment relationship.1 Because the entities remain legally distinct, they do not take on the form of a parent-subsidiary relationship. To some extent, each or both employers control the employees’ terms and conditions of employment.2 The scope of control is the deciding factor in both the previous and new joint employer standards.

Joint employer relationships can occur in many circumstances and in various industries. Common circumstances where joint employment exists include an agreement to share employee services or employees, one entity acts in the interest of the other entity with regard to employees, and situations of shared control over an employee.3

1West’s ALR Digest Labor and Employment, 1176 ALRDG 231HK1176 “Single or joint employer.” 2Id. 3See 29 C.F.R. § 825.106(a) (FMLA setting forth three common relationships where joint employment occurs).

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The joint employer standard is applied in unfair labor practice proceedings where an employer is accused of violating the NLRA. If joint employment is established, an employer may be found jointly and severally liable for the violations of the other employer in addition to liability for its own violations.

B. The Traditional Joint Employer Standard

The NLRB contends the joint employer standard is appropriate to “‘encourag[e] the practice and procedure of collective bargaining’ when otherwise bargainable terms and conditions of employment are under the control of more than one statutory employer.”4

Under the traditional joint employer standard announced in 1982, which also involved Browning-Ferris, the Board held that joint employment exists where the entities share or codetermine the matters governing the essential terms and conditions of employment.5 However, over time, the NLRB has drastically narrowed the interpretation of this standard to require entities to exercise “direct and immediate” control over employment matters.6 This traditional standard also mandated an actual exercise of a high level of control over the terms and conditions of another employer’s employees.

C. The “New” Joint Employer Standard

1. Browning-Ferris

On August 27, 2015, the NLRB issued a highly contested decision in Browning-Ferris Industries of California, Inc. (“Browning-Ferris”) that significantly lowered the bar as to the level of control required to find two entities joint employers.7 Browning-Ferris Industries (“BFI”) is a recycling facility that sorts materials into separate commodities that are then sold to other businesses. BFI directly employs approximately 60 employees who are part of a bargaining unit and represented by a union. For additional labor support, BFI contracts with Leadpoint to supply workers who manually sort materials on conveyor belts, clean screens on the sorting equipment, and clean the facility. BFI and Leadpoint entered into a temporary labor services agreement which states Leadpoint is the sole employer of the workers it supplies. The agreement also specifically renounces that any part of the agreement should be construed to create an employment relationship between BFI and the workers Leadpoint supplies. The union representing BFI employees sought to represent approximately 240 Leadpoint employees, which prompted questions as to whether BFI was a “joint employer” of the Leadpoint employees.

4See Browning-Ferris Industries of California, Inc., Case No. 32-RC-109684 (Aug. 27, 2015). 5NLRB v. Browning-Ferris Industries of Pennsylvania, Inc., 691 F.2d 1117 (3d Cir. 1982). 6Id. 7See supra at 4.

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To reach its decision in Browning-Ferris, the NLRB found revision of the joint employer standard necessary to “adapt the Act to the changing patterns of industrial life.” Specifically, the NLRB stated the “procurement of employees through staffing and subcontracting arrangements, or contingent employment has steadily increased” to warrant articulating the new standard. The Board also cited as support for its new standard an August 2014 study that found 2.87 million workers were employed by a temporary agency, making up 2 percent of the nation’s workforce.

Now, under the new standard, for two entities to be considered a joint employer, the following conditions must be met:

1) Both entities are “employers” under the common law; and 2) The entities share or codetermine matters governing the essential terms and

conditions of employment.

The party who argues for a joint employer standard to apply has the burden of satisfying the above test. Because the Board’s decision will have retroactive application, employers involved in similar representation cases will immediately apply the new standard.

Under its revised joint employer standard, the Board found that BFI and Leadpoint were joint employers of the labor supplied by Leadpoint because BFI “codetermined” essential terms and conditions of the employment relationship. To reach this conclusion, the Board focused on BFI’s standards that Leadpoint had to comply with in hiring employees, BFI’s ability to control the speed of items moving on the sorting conveyer belts, its managers’ assignment of specific tasks to Leadpoint employees, and its prohibition that Leadpoint employees could be paid more than BFI employees in comparable roles. According to the Board, these facts demonstrated that BFI had the ability to exercise direct or indirect control over Leadpoint employees.

2. Sufficient Control

The most significant change to the joint employer standard is the type of control that suffices to establish a joint employer relationship. In overruling its prior decisions in Laerco, TLI, A&M Property, Airborne Express, and the 2013 Regional Director’s ruling in Browning-Ferris that BFI was not a joint employer of Leadpoint employees, the Board held it is the right to control rather than the actual exercise of control that establishes a joint employer relationship. The right to control can be the mere possession or reservation of control over the essential terms or conditions of employment. And, the right to control includes an entities’ ability to control either directly or indirectly, including through an intermediary. While the traditional standard mandated the exercise of “direct and immediate control,” the new standard only requires the right to indirectly control in a “limited and routine manner.” To justify such a broad interpretation of “control,” the Board repeatedly referenced the “right to control” factor under the common law agency test used to assess whether a worker should be classified as an employee or independent contractor. The Board failed, however, to identify the amount of control needed to satisfy the threshold to find a joint employer relationship.

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3. Factors to Assess

In evaluating whether the entities “share or co-determine” the essential terms and conditions of employment, the Board announced it will take an “inclusive approach” in defining such terms and conditions. The Board provided a non-exhaustive list of factors it will consider which includes the following:

• Wages and hours; • Hiring, firing, discipline, supervision, and direction; • The number of workers to be supplied; • Control over scheduling, seniority, and overtime; and • Assignment of work and determining the manner and method of work

performance.

Other factors that have traditionally been considered include the issuance of uniforms, administrative record keeping, and the establishment of work rules.8 In analyzing these factors, the Board stated that “all incidents of the [employer] relationship must be assessed” and a “full assessment of the facts” be made.

D. Application to Other Employment Contexts

Other areas of employment law may borrow the NLRB’s new standard for finding statutory joint employment exists. Application of the new test could expose employers to new forms of liability and impose obligations beyond the potential liability under the NLRA.

1. Family Medical Leave Act (“FMLA”)

Currently, the FMLA defines joint employment as occurring where “two or more businesses exercise some control over the work or working conditions of the employee.”9 FMLA liability can be triggered for both employers if one entity fails to restore an employee to their pre-leave position.10 The need for clear communication between the entities and proper procedures is critical where an employee notifies only one entity of the need to take FMLA leave. Under the FMLA’s current interpretation of joint employment, an employee only needs to notify their primary employer of their intent to take FMLA leave.11 But, if the primary employer violates the FMLA, the second entity is still held directly liable for engaging in “prohibited acts” under the FMLA.12 As such, while the term “some control” remains ambiguous under the current FMLA 8Employment Coordinator, “The joint employer doctrine,” 9 Emp. Coord. Labor Relations § 4:27 (September 2015). 9929 C.F.R. § 825.106(a) (emphasis added). 10See Grace v. USCAR, 521 F.3d 655 (6th Cir. 2008). 11Manual on Employment Discrimination and Civil Rights Actions in the Federal Courts, 1 Manual on Employment Discrimination § 9:11:75. 12Id.

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framework, the adoption of the NLRB’s new standard would greatly increase the costs of implementing procedures for joint employers to comply with the FMLA.

2. Department of Labor & OSHA

Just before the issuance of Browning-Ferris, the International Franchise Association (“IFA”) leaked to the media an internal memorandum the Department of Labor (“DOL”) prepared. This memorandum examines whether the Occupational Safety and Health Administration (“OSHA”) can hold franchisors and franchisees jointly liable under the Occupational Safety and Health Act. The memorandum reportedly instructs OSHA investigators to request the franchise agreement, franchisors’ involvement in implementing or overseeing franchisees’ safety programs, and other documents on the parties’ business relationship. As such, the requested documents exceed the scope of inquiries on the franchisors’ involvement in safety issues at franchisee locations. OSHA’s focus on the business relationship and control over safety issues could mean OSHA is leaning toward applying the joint-employer as announced in Browning-Ferris.13

Additionally, OSHA announced an initiative to strengthen workplace safety for temporary workers. Specifically, the DOL issued a statement on its webpage that host employers and staffing share responsibility as joint employers for maintaining a safe working environment for temporary workers. The DOL’s word choice in using the term “share” responsibility could be telling of the DOL’s intent to adopt the NLRB’s new joint employer standard to encourage entities to actively prevent workplace injuries and comply with OSHA requirements.

3. Other Applications of the Joint Employer Standard

The EEOC similarly announced it may too expand the joint employer standard to encompass more employers and tackle discrimination in the workplace. Notably, the EEOC filed a friend-of-the-court brief in Browning-Ferris, which illustrates its deference to the Board.14 Recently, however, the Northern District of Illinois refused to apply the revised joint employer standard in a Title VII sex discrimination and retaliation case.15 The Court reasoned the Seventh Circuit has been reluctant to apply a joint employer standard because “reliance on traditional labor law principles” is “an awkward approach to determining Title VII liability.”16 Commentators also suggest that the revised joint employer standard could be applied in § 1981 claims and under the Fair Labor Standards Act.

13Minehan, Maureen, “Far-Reaching Joint Employer Decision May Catch Employers by Surprise,” 32 No. 20 Emp. Alert NL 1 (October 2, 2015). 14Id. 15Nardi (Ecker) v. ALG Eworldwide Logistics and Transport, No. 13-C-8723, 2015 WL 5462101 (N. D. Ill. Sept. 16, 2015). 16Id. at fn. 3.

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4. Workers Who May Now Be Subject to Your Control

Under the new joint employer standard, temporary, contingent, contractor partnerships, and franchisee workers could now translate into your “employees.” As such, the line is blurred between independent entities and parties truly acting jointly that collaborate toward a common goal. And, even though employers may have little actual control over the employees, the entity with whom it shares “joint” ownership over employee relations with, could subject employers to liability under various statutes in the employment context.

Browning-Ferris will also make it much easier for non-unionized workforces to become unionized. Where one employer is unionized and the other is not, the Board is expected to approve multi-employer bargaining units consisting of a mix of employees from both employers.17 And, Browning-Ferris provides unions with greater bargaining power – especially with respect to large employers they previously did not have access. Moreover, because of the small amount of control that suffices to transform a once independent entity into a joint employer, the new employer could now be forced to bargain over terms for which it has little actual control over. This direct access could result in unions demanding, and succeeding at obtaining, higher wages and different working conditions.

Employers should also pay attention to the NLRB’s decision in the pending McDonald’s USA LLC case which in which the Board argues McDonald’s and its franchisees are joint employers. The McDonald’s decision will provide insight on how the Board intends to apply the joint employer standard outside of the staffing agency context, as in Browning-Ferris.

E. Recommendations to Avoid Becoming a Joint Employer

Because of the minimal control that is necessary to become a joint employer, many employers are placed in a dilemma of either taking more control over workers so they can effectively control essential terms and conditions or reduce the amount of control to avoid characterization as a joint employer. Both options carry benefits and risks. Obtaining more control effectively allows an employer to stay in control over employees’ essential terms and conditions and have a stronger voice to ensure compliance with employment laws. But, with more control, unions can more easily target employees of large employers. In contrast, lessening control could allow a company to escape joint employer characterization, but subject a company to the risk of losing its brand identity and reputation, such as for superior customer service.18

To minimize the risk of becoming a joint employer, the following actions are recommended:

17See supra at 13. 18Thompson Reuters, “Companies Liable for Labor Violations by Franchisees, U.S. Labor Board Says,” 30 No. 4 Westlaw Journal Employment 8 (September 15, 2015).

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• Review relationships with staffing agencies, temporary employees, or subcontractors; • Analyze agreements, business relationships, and practices to determine the extent of

control exercised or reserved to exercise; • If necessary, revised contract provisions to remove excess control, which the employer

does not actively use or need to further the goals under the agreement; • Prepare for the potential to be involved in labor matters of contingent workers’ primary

employers; • Monitor efforts to unionize in the workplace; and • Include a provision in all agreements stating the primary employer retains all control over

the essential terms and conditions of its employees’ employment.

Commentators suspect Congress may enact legislation that would render the Browning-Ferris decision null. However, it is unlikely that any such legislation will pass in the upcoming election year.

BFI is also voicing its discontent with the decision by refusing to bargain with the union. As a result, on September 25, 2015, the union filed an unfair labor charge against BFI’s successor company. Challenging the joint employment standard will not be easy for BFI because it cannot directly appeal a representation case. Instead, BFI will have to go through a lengthy appeals process before reaching the U.S. Court of Appeals, which would have the power to overturn the Browning-Ferris decision. First, the NLRB would then have to issue a complaint against BFI for its refusal to bargain. Next, the NLRB would need to find BFI engaged in an unfair labor practice in refusing to engage in the bargaining process. Only then could BFI appeal the NLRB’s decision and argue it is not a joint employer.

IV. REGULATING EMPLOYEE CONDUCT A. The NLRB’s Commitment to Protection of Employees’ Criticism of

Management

In March of 2015, the NLRB decided Pier Sixty, LLC and Hernan Perez and Evelyn Gonzalez.19 In doing so, the NLRB signaled the NLRA’s broad scope in protecting employees’ rights to criticize management. The employer, a catering service company employed individuals to work during dinners, fundraisers, and other events. At the time of the incident at issue, employees had expressed concerns about disrespect from management and were preparing to hold a union election.

The incident occurred during a fundraising event two days before the union election. At the event, a manager approached three servers and in a loud voice pointed to arriving guests and said, “Turn your head that way and stop chitchatting.” Shortly thereafter, the manager told the

19 Cases 02-CA-068612 and 02-CA-070797 (March 31, 2015).

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serves in a harsh tone to “Spread out, move, move” and “spread out more.” One of the servers expressed his frustration with the manager’s disrespect to the head of the employees’ union organizing efforts. That employee then took a break and stepped outside of his employer’s facility and posted the following message on his personal Facebook page:

“Bob is a NASTY MOTHER FUCKER don’t know how to talk to people!!!!!! Fuck his mother and his entire fucking family!!!! What a LOSER!!!! Vote YES for the UNION!!!!!!!”

The employee made the Facebook post just two days before the union election, a critical time according to the NLRB in its decision. Approximately two weeks later, the employer terminated the employee’s employment citing the Facebook comments as a violation of company policy. Despite the obscene and vulgar language of the post, the NLRB found the employee’s Facebook comments constituted protected, concerted activity. Moreover, the NLRB found that the employee’s comments “were not so egregious as to exceed the Act’s protection.”

To reach its holding, the Board refused to apply the four-factor test announced in Atlantic Steel Co., which has traditionally been used to determine whether conduct is so egregious as to lose the protection of the Act.20 Instead, the NLRB evaluated the “totality of the circumstances” to determine whether the employee’s comments lost the Act’s protection.21 Specifically, the NLRB found that the company had been hostile toward union activity and the comments encouraged union representation, that the Facebook post was an impulsive reaction provoked by management, that the employer generally tolerated widespread profanity and had not disciplined other employees for using such language. As to the location of the post, the NLRB found the employee made the post while alone, on a break outside the employer’s facility. As such, the NLRB held that absent any evidence that the post disrupted the employer’s business, the post would not lose the protection of the Act.

Pier Sixty demonstrates the NLRB’s commitment to protect employees’ criticism of management – especially when those criticisms are connected to union activity. However, the NLRB’s failure to address the expansive reach of social media also demonstrates the leeway with which employees are free to criticize and even insult their employers online.

20Atl. Steel Co., 245 N.L.R.B. 814, 816 (1979). The four-factor test examined: 1) the place of the discussion; 2) the subject matter of the discussion; 3) the nature of the employee’s outburst; and 4) whether the outburst was provoked by an employer’s unfair labor practice. 21Under its totality of the circumstances approach, the board evaluated: 1) whether evidence exists of antiunion hostility; 2) whether the employer provoked the conduct; 3) whether the conduct was impulsive or deliberate; 4) the location of the Facebook post; 5) the subject matter of the post; 6) the nature of the post; 7) whether the employer considered similar conduct offensive; 8) whether the employer maintained a specific rule against the language at issue; and 9) whether the discipline imposed was typical or proportionate to similar violations.

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B. Office of the General Counsel: Handbook Rules on Employee Conduct

On March 18, 2015, the NLRB General Counsel issued a memorandum that discussed employee handbook provisions related to employee conduct. The memorandum outlined recent NLRB decisions that address various handbook provisions and provided examples of both lawful and unlawful policy language.

The significance of employee handbook provisions or workplace rules is demonstrated by the fact that, if the provision or rule operates to have a chilling effect on employees’ Section 7 activity, the mere maintenance of that provision or work rule violates Section 8 of the Act. Specifically, a rule regulating employee conduct runs afoul of the NLRA if: 1) it explicitly restricts protected concerted activity; 2) employees would reasonably construe the rule’s language to prohibit Section 7 activity; 3) it was promulgated in response to protected concerted activity; or 4) it is actually applied to restrict the exercise of Section 7 rights.22

As outlined below, the General Counsel focused on several common provisions maintained in employer handbooks. Throughout the General Counsel’s memorandum it is evident that the key takeaways are to provide context about when the rule would apply, specific examples of prohibited and/or permissible behavior, a rationale for why the rule is in place, and disclaimers that the rule is not intended to prohibit the employees’ exercise of Section 7 rights.

A. Confidentiality

The NLRB’s concern with confidentiality provisions is that such provisions either explicitly prohibit employees from discussing their terms and conditions of employment (i.e. wages, hours, etc.) or may implicitly lead employees to reasonably construe confidentiality provisions to prohibit such discussions. The following are recommendations for drafting a handbook’s confidentiality provision:

1. Provide context to the meaning of “confidential information”: A mere prohibition on disclosing “confidential information” or “employee information” that includes or would be understood to include employee or personnel information violates the NLRA. For example, a ban on the use of “employee information” is too ambiguous because it could be found to prevent discussion of employee contact information or wage data. Thus, employers should craft a definition of “confidential information” that removes any reference to employee information or terms or conditions of employment.

2. Avoid using a prohibition on disclosing “non-public information”:

Discussions on employee benefits and wages are common examples of non-public information that receive Section 7 protection. As such, a rule against discussing “non-public information” may cause employees to reasonably construe the rule to prohibit their Section 7 rights. It is

22See Lutheran Heritage Village-Livonia, 343 NLRB 646 (2004).

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recommended that employers include a disclaimer that the employer is not concerned with employees discussing terms or conditions of employment. Further, employers should add policy language that references “business secrets,” “confidential financial data,” “other non-public proprietary company language” or information “regarding business partners, vendors, or customers” to add context to the meaning of “confidential information.”

3. The location of the rule matters. A rule when read in isolation that would

otherwise violate the Act might nevertheless be lawful if the location of the rule provides sufficient context about the type of confidential information the employer seeks to protect. For example, a rule banning the disclosure of information acquired during employment would be unlawful when read in isolation. But, that same rule may be lawful when located among other provisions relating to conflicts of interest, SEC regulations, and other state and federal rules and regulations.

B. Regulating Employee Conduct Toward Company and Supervisors

As part of their Section 7 rights, employees have the right to criticize or protest labor policies, management, and treatment of employees. An employees’ right to criticize management extends even to the point where false or defamatory statements may be protected. Recently, the NLRB found a rule that prohibited employees from engaging in “disrespectful,” “negative,” “inappropriate,” or “rude” conduct toward management without further context or clarification was unlawful.23 Moreover, employees have the right to criticize their employer in public. As such, the NLRB has found unlawful broad prohibitions about harming the company’s business or reputation, bans against social media posts that could harm the company, or rules against statements that could undermine the employer.

In contrast, employers have a legitimate business interest in maintaining respectful, cooperative, and professional work environments, and thus, a rule mandating such behavior is lawful. In drafting such a rule, a provision regulating employee conduct should not reference “the Company,” “employer,” “company employees,” “management,” or “supervisors.” However, when the context shows that the employer is seeking to regulate conduct that falls outside the protections of the NLRA, employers can lawfully include a policy provision that regulates employee behavior toward the employer or management. For example, a policy that regulates serious misconduct such as assault, harassment, or threats, is lawful.24 Rules that prohibit insubordinate conduct have also been found lawful.25 The NLRA also does not protect employee conduct that seeks to disparage an employer’s product or service.

23See Casino San Pablo, 361 NLRB No. 148, slip op. at 3 (Dec. 16, 2014). 24See Tradesmen International, 338 NLRB 460 (2002). 25See Copper River of Boiling Springs, LLC, 360 NLRB No. 60 (Feb. 28, 2014).

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C. Regulating Employee Conduct Toward Other Employees

Unionization and other labor related discussions can be sensitive topics that lead to heated debates and arguments among employees. Based on the protected nature of these discussions, Section 7 protections extend to even “intemperate, abusive and inaccurate statements” related to debates on employees’ terms and conditions of employment.26 For example, an outright ban on politically motivated or “controversial” topics can run afoul of the NLRA because of the potential of the policy applying to discussions on pending legislation impacting employees’ terms or conditions of employment. Drafting a policy that protects an employers’ legitimate business interest in maintaining a harassment-free workplace while also respecting employees’ Section 7 rights can thus be challenging. Again, context matters and providing examples of prohibited conduct, such as the use of racial slurs, derogatory statements, or insults will aid employers in drafting a lawful anti-harassment policy.

D. Regulating Employee Conduct Toward Third Parties

Employers commonly include a company media policy in their handbooks which can unlawfully restrict employees’ Section 7 rights. Many company media policies direct employees to refer any media or government agency inquiries to management. However, broad prohibitions against employee communications with third parties may be construed to restrict an employees’ Section 7 rights and thus violate the Act. Instead, the Board encourages employers to draft policies that do not restrict communications between employees and third parties, but rather, limit who may speak on behalf of the company.

E. Use of Company Logos, Copyrights, and Trademarks

Because employees have a right to use a company name and logo on protest materials, including picket signs and leaflets, employers should not include a broad ban prohibiting employees from using its intellectual property. Specifically, employers have run into trouble when including such prohibitions in their social media policies. Instead, the Board encourages employers to adopt a policy that requires employees to respect intellectual property laws and warns employees against infringing upon its logos, brand names, taglines, slogans, or other trademarks.

F. Photography and Recordings

The Board has also taken issue with blanket bans prohibiting employees from possessing or using photographic or recording devices in the workplace. To further their protected concerted activity, employees have the right to photograph and make recordings in the workplace, including through the use of personal devices, on non-work time. However, employers need to clearly define what constitutes “non-work time” because employees may misunderstand that

26Linn v. United Plant Guards, 383 U.S. 53 (1966).

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breaks and meals do not count as actual work time, and therefore, use of these devices is permitted during those times. The Board states the use of these devices cannot be restricted during non-work time because employees have a right to document health and safety violations and other unfair labor practices. Moreover, the Board did acknowledge that circumstances can warrant the imposition of a ban on devices when the scope is properly limited, such as in protecting patient privacy interests.27

G. Restrictions on Employees Leaving Work

In restricting an employee’s ability to leave work, the Board is concerned with an employer infringing upon an employee’s right to engage in strikes or walkouts. Employers should avoid using terms such as “walking off the job” or “work stoppage” that could be interpreted to include strikes. Instead, the Board noted that provisions against “entering or leaving company property without permission” are valid regulations of employee conduct because they cannot be construed to prevent strikes.

H. Conflict-of-Interest Rules

Employers need to carefully draft conflict-of-interest rules so as not to ban any and all activity that could be in conflict with the employer’s interests. Otherwise, broad conflict-of-interest rules could reasonably be construed to ban the organization of or participation in protests, boycotts, or solicitation of union support.28 The key to drafting a lawful conflict-of-interest rule is to include examples of prohibited conflicts of interest and insert context surrounding the rule which cannot reasonably be construed to restrict Section 7 activity. The following are examples of rules that provide sufficient context to a conflict-of-interest rule:

• Holding an ownership or financial interest in an outside business and accepting gifts, money, or services from an outside business;

• Avoiding outside employment with an employer customer, supplier, or competitor, or having a significant financial interest with one of these entities; or

• Refraining from activities, investments, or associations that compete with the company, interfere with one’s judgment concerning the company’s best interests, or exploit one’s position with the company for personal gains.

27See Flagstaff Medical Center, 357 NLRB No. 65, slip op. at 5 (Aug. 26, 2011). 28

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V. The Final Rule: Quickie Elections

A. Expediting the Time to An Election

At the close of 2014, the NLRB published its Final Rule, which has been termed an “ambush rule” and “quickie election” rule. The Final Rule will expedite the process of holding union representative elections. On April 14, 2015, the Final Rule went into effect and tilted election procedures in favor of unions by reducing the amount of time between a union filing a representation petition and the holding of an election. As a result of this accelerated election process, elections could be held in as few as 13 days from the date of filing the petition. The consequence of this shortened time frame is that employers will have less time to respond to the petition, tell their side of the story to employees, and provide information critical to employees as they decide whether to vote in favor of unionization. With employers having less time to formulate a response to organization efforts, this “fast track” election process also reduces the amount of time that employees will have to make an informed decision on whether or not to support unionization.

Other changes to the election process based on the Final Rule include the following:

• Pre-election hearings will generally be scheduled within eight days from receiving notice of a hearing;

• Employers must submit a position statement one day before the pre-election hearing, which is limited solely to determine whether there is a “question of representation.” Any issues not raised in the position statement are waived;

• Voter eligibility questions will generally not be addressed at the pre-election hearing; and

• In general, post-hearing briefs will not be permitted.29 The Final Rule also charges an NLRB regional director with the responsibility to determine,

“which, if any, voter eligibility questions should be litigated before an election is held.” In essence, the regional director can limit the issues in pre-election litigation to those solely concerned with whether it is appropriate to conduct an election. All other issues regarding voter eligibility questions are now reserved for a post-election hearing which is contrary to the previous rule where these questions were litigated before the election was held.

The Final Rule also makes it easier for unions to directly contact employees in attempts to

persuade them to organize. Pursuant to the Final Rule, employers must file an “Excelsior list” of all eligible voters and disclose each employee’s name, address, available personal cell phone and 29Husband, John. Colorado Lawyer, 44-APR Colo. Law. 29, “Recent NLRB Actions Give Boost to Union Organizing.” (April 2015).

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home telephone numbers, personal email addresses, work location, shift, and job classification. Consequently, unions now have direct access to employees’ personal contact information to facilitate organization efforts and employee privacy may be compromised.

B. Reactions to the Quickie Election Rules

Before the Final Rule went into effect, two lawsuits were filed to invalidate the election

rules.30 Both of these lawsuits have been dismissed on the grounds that great deference must be accorded to the NLRB. One case is on appeal to the Fifth Circuit and it is expected the other suit will similarly appeal.

Before the Final Rule went into effect, it generally took approximately 38 days between the

filing of a petition and an election to be held.31 After the Final Rule went into effect, the average length of time between the filing of a petition and holding an election was 23 days.32 And, within the first month of the Final Rule going into effect, there was a 17% increase in the number of representation petitions filed.33 Therefore, the NLRB has been successful in decreasing the amount of time it takes for an election to be held and increasing the number of representation petitions filed.

C. Recommendations to Prepare for Union Elections

Based on the shortened time frame employers have to prepare for a union election and communicate to employees the pros and cons of unionization, employers are advised to be prepared if and when threats of unionization arise. The following are actions employers can take now:

• Prepare draft communications to employees in advance on the pros and cons of unionization to distribute if a petition for an election is filed;

• Identify potential bargaining unit(s) that would be appropriate at each company location and determine which employees should be included and excluded from these units to assist in drafting a statement of position;

• Ascertain which supervisors would qualify as statutory supervisors that would assist in communicating the company’s position on unionization to employees;

30See Associated Builders and Contractors of Texas, Inc., et al. v. NLRB, Case No. 1:15-cv-00026. (W.D. Tex. Jan. 13, 2014); Chamber of Commerce of the United States of America v. NLRB, No. 1:15-cv-9 (D.D.C. Jan. 5, 2015). 31McBride, David. Massachusetts Employment Law Letter, 26 No. 4 Mass. Emp. L. Letter 7, “Quickie Election Rule Update” (July 2015). 32Id. 33Id.

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• Train statutory supervisors on the rules of lawful campaign communications and to avoid attending union meetings to prevent election objections and/or unfair labor practice charges; and

• Monitor employee morale and encourage positive employee relations.34

VI. PURPLE COMMUNICATIONS: Granting Employees Access to E-Mail to Engage In Protected Activity

Also at the close of 2014, a divided NLRB issued its decision in Purple Communications, Inc., whereby it overruled Register Guard and found that employees had a right to use an employer’s e-mail system to engage in Section 7 activity. In particular, the majority in Purple Communications, Inc. held that:

• employees may use an e-mail system for statutory protected communications, on non-working time, where an employer has chosen to give the employees access to their e-mail systems;

• that this ruling only applies to employees who have already been granted access to the employer’s e-mail system in the course of their duties, but does not require employers to provide such access;

• that an employer may justify a total ban on the use of e-mail, including Section 7 use on non-working time, by demonstrating that “special circumstances” make the ban necessary to maintain production or discipline; and

• that even absent justification for a total ban, the employer may apply uniform and consistently enforced controls over its e-mail system to the extent such controls are necessary to maintain production and discipline.

The Board went on to state that it was not addressing whether or not non-employees had a right to access employer e-mail; nor were they addressing any other types of electronic communication systems. Notably, Purple Communications only applies to current employees and does not extend similar protections to third-party organizers assisting in the unionization process.35

The Board relied in large part upon the age old Republic Aviation decision, which dealt with employees’ rights in the more traditional setting of no-solicitation and no-distribution policies. In other words, Republic Aviation focused on the accommodation between employees’ Section 7 rights and employers’ property rights. And while the Board said it was not finding that the use of e-mail fell within either one of these categories, it was still utilizing that framework for its analysis in this case. The majority found that one of the key grounds for its finding was the fact that the previous Board, in the case of Register Guard, failed to perceive the importance of

34Nobile, Robert. Human Resources Guide § 8:18, “‘Quickie Election’ Rule.” (Oct. 2015). 35See supra at 29.

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e-mails as a means by which employees engage in protected communications, and that such importance had increased dramatically during the seven years since Register Guard had issued.

The dissent, consisting of Members Miscimarra and Johnson, took exception to the

analysis submitted by the majority. Member Miscimarra attacked the majority’s presumption that limiting an employer’s e-mail system to business purposes constituted a unreasonable impediment to self-organization given all the other available means of electronic communication available, finding that “national uprisings have resulted from the use of social media sites like Facebook and Twitter . . .” and that “. . . unlike single-purpose business e-mail systems, other electronic communication platforms such as social media sites, text messaging and e-mail services such as Gmail and Yahoo mail undergo near constant development and expansion. Accordingly, these public forums of electronic communication have features that are more effective, more user friendly, and more conducive to facilitating concerted activities than employer e-mail systems.” Member Johnson echoed Member Miscimarra’s position, in large part, but further attacked the decision of the majority on First Amendment grounds. Both simply found the majority’s opinion lacking in terms of effectively distinguishing previous decisions by the Board which limited employees’ use of company equipment for Section 7 purposes, for it has long been held that an employer need not provide communication equipment, be it telephones, electronic bulletin boards or copy machines to assist employees in their efforts to engage in concerted, protected activity.

Therefore, at this point, a review of e-mail policies is advised especially for those limited

exceptions noted in the decision. While employers are not prohibited from continuing to monitor employees’ e-mails for legitimate purposes, such as productivity, preventing misconduct, and identifying harassment or discrimination, employers should clearly state their intent to monitor employees’ e-mail for these lawful purposes in monitoring policies.36 Employers are also advised to remind employees that despite Purple Communications’ holding, employees still do not have an expectation of privacy in using their employer’s e-mail system.37 Moreover, if discipline is contemplated in the context of an employee utilizing an employer’s e-mail system for Section 7 activity, caution should be noted regarding lengthy suspensions or discharges that might result in significant economic damages. Commentators also express concern for just how far Purple Communications can apply in the workplace and foresee the decision assisting in the recruitment of members in class action cases, wage and hour disputes where an employer bans an employee from using its e-mail system during non-work hours, allegations of improper surveillance, and an extension of employees’ rights to use other company owned property and

36 Antonuccio, Laura. Arizona Employment Law Letter, 21 No. 9 Ariz. Emp. L. Letter 2, “NLRB: Work E-Mail Not Just for Business Purposes Anymore.” 37Id.

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equipment.38 Additionally, commenters also speculate that unions that lose union representation campaigns may argue for overturning of negative election results because the employer’s e-mail policy was overbroad and thus prevented a fair campaign.39

VII. CONCLUSION

With the NLRB’s recent guidance and decisions aimed at assisting employees to be on the fast track toward unionization and expanding the scope of protections afforded to employees, all employers – whether currently unionized or not—are advised to pay attention to the NLRB. Employers are encouraged to act now to review their agreements with contractors, franchisees, and other temporary or contingent workforces and to remove any excess or reserved control from agreements to avoid being classified as a joint employer. Otherwise, an employer will be forced to attend the bargaining table to discuss changes to employees’ terms and conditions of employment even though the employer may in practice have little control. In addition, other agencies’ have shown indications that they too could expand the definition of a joint employer to encompass many more entities which in turn could expose a plethora of entities to liability under workplace laws. And, before attempting to regulate employees’ conduct through handbook provisions, employers should scrutinize handbook provisions to determine if their policies pass the muster of the NLRB’s guidance and recent decisions. Because the NLRB has taken a broad approach to protecting employees’ conduct, employers should carefully review handbook provisions to determine whether an employee could reasonably construe a policy as violating their Section 7 rights. Next, employers need to act now to prepare for the possibility of unionization. Once a petition for representation is filed, employers have little time to respond and discourage unionization thanks to the NLRB’s Quickie Election Rules. Finally, the combination of the Quickie Election Rules and Purple Communications greatly advances the opportunities and ease for which unions can quickly contact employees and organize a campaign for union representation.

38See “Lawyers Weigh In On NLRB Employer Email Ruling,” Law 360 (December 11, 2014). http://www.law360.com/employment/articles/603818?nl_pk=265bce7e-9d0a-4687-91ab-b43b6fbe8d3e&utm_source=newsletter&utm_medium=email&utm_campaign=employment. 39See supra at 29.

OFFICE OF THE GENERAL COUNSEL

MEMORANDUM GC 15- 04 March 18, 2015

TO: All Regional Directors, Officers-in-Charge, and Resident Officers

FROM: Richard F. Griffin, Jr., General Counsel

SUBJECT: Report of the General Counsel Concerning Employer Rules

Attached is a report from the General Counsel concerning recent employer rule cases.

Attachment

cc: NLRBU Release to the Public

MEMORANDUM GC 15-04

2

Report of the General Counsel

During my term as General Counsel, I have endeavored to keep the labor-management bar fully aware of the activities of my Office. As part of this goal, I continue the practice of issuing periodic reports of cases raising significant legal or policy issues. This report presents recent case developments arising in the context of employee handbook rules. Although I believe that most employers do not draft their employee handbooks with the object of prohibiting or restricting conduct protected by the National Labor Relations Act, the law does not allow even well-intentioned rules that would inhibit employees from engaging in activities protected by the Act. Moreover, the Office of the General Counsel continues to receive meritorious charges alleging unlawful handbook rules. I am publishing this report to offer guidance on my views of this evolving area of labor law, with the hope that it will help employers to review their handbooks and other rules, and conform them, if necessary, to ensure that they are lawful.

Under the Board's decision in Lutheran Heritage Village-Livonia, 343 NLRB 646 (2004), the mere maintenance of a work rule may violate Section 8(a)(1) of the Act if the rule has a chilling effect on employees' Section 7 activity. The most obvious way a rule would violate Section 8(a)(1) is by explicitly restricting protected concerted activity; by banning union activity, for example. Even if a rule does not explicitly prohibit Section 7 activity, however, it will still be found unlawful if 1) employees would reasonably construe the rule's language to prohibit Section 7 activity; 2) the rule was promulgated in response to union or other Section 7 activity; or 3) the rule was actually applied to restrict the exercise of Section 7 rights.

In our experience, the vast majority of violations are found under the first prong of the Lutheran Heritage test. The Board has issued a number of decisions interpreting whether "employees would reasonably construe" employer rules to prohibit Section 7 activity, finding various rules to be unlawful under that standard. I have had conversations with both labor- and management-side practitioners, who have asked for guidance regarding handbook rules that are deemed acceptable under this prong of the Board's test. Thus, I am issuing this report.

This report is divided into two parts. First, the report will compare rules we found unlawful with rules we found lawful and explain our reasoning. This section will focus on the types of rules that are frequently at issue before us, such as confidentiality rules, professionalism rules, anti-harassment rules, trademark rules, photography/recording rules, and media contact rules. Second, the report will discuss handbook rules from a recently settled unfair labor practice charge against Wendy's International LLC. The settlement was negotiated following our initial

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determination that several of Wendy's handbook rules were facially unlawful. The report sets forth Wendy's rules that we initially found unlawful with an explanation, along with Wendy's modified rules, adopted pursuant to a informal, bilateral Board settlement agreement, which the Office of the General Counsel does not believe violate the Act.

I hope that this report, with its specific examples of lawful and unlawful handbook policies and rules, will be of assistance to labor law practitioners and human resource professionals.

Richard F. Griffin, Jr. General Counsel

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Part 1: Examples of Lawful and Unlawful Handbook Rules

A. Employer Handbook Rules Regarding Confidentiality

Employees have a Section 7 right to discuss wages, hours, and other terms and conditions of employment with fellow employees, as well as with nonemployees, such as union representatives. Thus, an employer's confidentiality policy that either specifically prohibits employee discussions of terms and conditions of employment—such as wages, hours, or workplace complaints—or that employees would reasonably understand to prohibit such discussions, violates the Act. Similarly, a confidentiality rule that broadly encompasses "employee" or "personnel" information, without further clarification, will reasonably be construed by employees to restrict Section 7-protected communications. See Flamingo-Hilton Laughlin, 330 NLRB 287, 288 n.3, 291-92 (1999).

In contrast, broad prohibitions on disclosing "confidential" information are lawful so long as they do not reference information regarding employees or anything that would reasonably be considered a term or condition of employment, because employers have a substantial and legitimate interest in maintaining the privacy of certain business information. See Lafayette Park Hotel, 326 NLRB 824, 826 (1998), enforced, 203 F.3d 52 (D.C. Cir. 1999); Super K-Mart, 330 NLRB 263, 263 (1999). Furthermore, an otherwise unlawful confidentiality rule will be found lawful if, when viewed in context, employees would not reasonably understand the rule to prohibit Section 7 protected activity.

Unlawful Confidentiality Rules

We found the following rules to be unlawful because they restrict disclosure of employee information and therefore are unlawfully overbroad:

• Do not discuss "customer or employee information" outside of work, including "phone numbers [and] addresses."

In the above rule, in addition to the overbroad reference to "employee information," the blanket ban on discussing employee contact information, without regard for how employees obtain that information, is also facially unlawful.

• "You must not disclose proprietary or confidential information about [the Employer, or] other associates (if the proprietary or confidential

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information relating to [the Employer's] associates was obtained in violation of law or lawful Company policy)."

Although this rule's restriction on disclosing information about "other associates" is not a blanket ban, it is nonetheless unlawfully overbroad because a reasonable employee would not understand how the employer determines what constitutes a "lawful Company policy."

• "Never publish or disclose [the Employer's] or another's confidential or other proprietary information. Never publish or report on conversations that are meant to be private or internal to [the Employer]."

While an employer may clearly ban disclosure of its own confidential information, a broad reference to "another's" information, without further clarification, as in the above rule, would reasonably be interpreted to include other employees' wages and other terms and conditions of employment.

We determined that the following confidentiality rules were facially unlawful, even though they did not explicitly reference terms and conditions of employment or employee information, because the rules contained broad restrictions and did not clarify, in express language or contextually, that they did not restrict Section 7 communications:

• Prohibiting employees from "[d]isclosing ... details about the [Employer]."

• "Sharing of [overheard conversations at the work site] with your co-workers, the public, or anyone outside of your immediate work group is strictly prohibited."

• "Discuss work matters only with other [Employer] employees who have a specific business reason to know or have access to such information.. .. Do not discuss work matters in public places."

• "[I]f something is not public information, you must not share it."

Because the rule directly above bans discussion of all non-public information, we concluded that employees would reasonably understand it to encompass such non-public information as employee wages, benefits, and other terms and conditions of employment.

• Confidential Information is: "All information in which its [sic] loss, undue use or unauthorized disclosure could adversely affect the [Employer's] interests, image and reputation or compromise personal and private information of its members."

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Employees not only have a Section 7 right to protest their wages and working conditions, but also have a right to share information in support of those complaints. This rule would reasonably lead employees to believe that they cannot disclose that kind of information because it might adversely affect the employer's interest, image, or reputation.

Lawful Confidentiality Rules

We concluded that the following rules that prohibit disclosure of confidential information were facially lawful because: 1) they do not reference information regarding employees or employee terms and conditions of employment, 2) although they use the general term "confidential," they do not define it in an overbroad manner, and 3) they do not otherwise contain language that would reasonably be construed to prohibit Section 7 communications:

• No unauthorized disclosure of "business 'secrets' or other confidential information."

• "Misuse or unauthorized disclosure of confidential information not otherwise available to persons or firms outside [Employer] is cause for disciplinary action, including termination."

• "Do not disclose confidential financial data, or other non-public proprietary company information. Do not share confidential information regarding business partners, vendors or customers."

Finally, even when a confidentiality policy contains overly broad language, the rule will be found lawful if, when viewed in context, employees would not reasonably understand the rule to prohibit Section 7-protected activity. The following confidentiality rule, which we found lawful based on a contextual analysis, well illustrates this principle:

• Prohibition on disclosure of all "information acquired in the course of one's work."

This rule uses expansive language that, when read in isolation, would reasonably be read to define employee wages and benefits as confidential information. However, in that case, the rule was nested among rules relating to conflicts of interest and compliance with SEC regulations and state and federal laws. Thus, we determined that employees would reasonably understand the information described as encompassing customer credit cards, contracts, and trade secrets, and not Section 7-protected activity.

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B. Employer Handbook Rules Regarding Employee Conduct toward the Company and Supervisors

Employees also have the Section 7 right to criticize or protest their employer's labor policies or treatment of employees. Thus, rules that can reasonably be read to prohibit protected concerted criticism of the employer will be found unlawfully overbroad. For instance, a rule that prohibits employees from engaging in. "disrespectful," "negative," "inappropriate," or "rude" conduct towards the employer or management, absent sufficient clarification or context, will usually be found unlawful. See Casino San Pablo, 361 NLRB No. 148, slip op. at 3 (Dec. 16, 2014). Moreover, employee criticism of an employer will not lose the Act's protection simply because the criticism is false or defamatory, so a rule that bans false statements will be found unlawfully overbroad unless it specifies that only maliciously false statements are prohibited. Id. at 4. On the other hand, a rule that requires employees to be respectful and professional to coworkers, clients, or competitors, but not the employer or management, will generally be found lawful, because employers have a legitimate business interest in having employees act professionally and courteously in their dealings with coworkers, customers, employer business partners, and other third parties. In addition, rules prohibiting conduct that amounts to insubordination would also not be construed as limiting protected activities. See Copper River of Boiling Springs, LLC, 360 NLRB No. 60 (Feb. 28, 2014). Also, rules that employees would reasonably understand to prohibit insubordinate conduct have been found lawful.

Unlawful Rules Regulating Employee Conduct towards the Employer

We found the following rules unlawfully overbroad since employees reasonably would construe them to ban protected criticism or protests regarding their supervisors, management, or the employer in general.

• "[Me respectful to the company, other employees, customers, partners, and competitors."

• Do "not make fun of, denigrate, or defame your co-workers, customers, franchisees, suppliers, the Company, or our competitors."

• "Be respectful of others and the Company."

• No "[d]efamatory, libelous, slanderous or discriminatory comments about [the Company], its customers and/or competitors, its employees or management.

While the following two rules ban "insubordination," they also ban conduct that does not rise to the level of insubordination, which reasonably would be understood

8

as including protected concerted activity. Accordingly, we found these rules to be unlawful.

• "Disrespectful conduct or insubordination, including, but not limited to, refusing to follow orders from a supervisor or a designated representative."

• "Chronic resistance to proper work-related orders or discipline, even though not overt insubordination" will result in discipline.

In addition, employees' right to criticize an employer's labor policies and treatment of employees includes the right to do so in a public forum. See Quicken Loans, Inc., 361 NLRB No. 94, slip op. at 1 n.1 (Nov. 3, 2014). Accordingly, we determined that the following rules were unlawfully overbroad because they reasonably would be read to require employees to refrain from criticizing the employer in public.

• "Refrain from any action that would harm persons or property or cause damage to the Company's business or reputation."

• "[I]t is important that employees practice caution and discretion when posting content [on social media] that could affect [the Employer's] business operation or reputation."

• Do not make "[s]tatements "that damage the company or the company's reputation or that disrupt or damage the company's business relationships."

• "Never engage in behavior that would undermine the reputation of [the Employer], your peers or yourself."

With regard to these examples, we recognize that the Act does not protect employee conduct aimed at disparaging an employer's product, as opposed to conduct critical of an employer's labor policies or working conditions. These rules, however, contained insufficient context or examples to indicate that they were aimed only at unprotected conduct.

Lawful Rules Regulating Employee Conduct towards the Employer

In contrast, when an employer's handbook simply requires employees to be respectful to customers, competitors, and the like, but does not mention the company or its management, employees reasonably would not believe that such a rule prohibits Section 7-protected criticism of the company. The following rules, which we have found lawful, are illustrative:

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• No "rudeness or unprofessional behavior toward a customer, or anyone in contact with" the company.

• "Employees will not be discourteous or disrespectful to a customer or any member of the public while in the course and scope of [company] business."

Similarly, rules requiring employees to cooperate with each other and the employer in the performance of their work also usually do not implicate Section 7 rights. See Copper River of Boiling Springs, LLC, 360 NLRB No. 60, slip op. at 1 (Feb. 28, 2014). Thus, we found the following rule was lawful because employees would reasonably understand that it is stating the employer's legitimate expectation that employees work together in an atmosphere of civility, and that it is not prohibiting Section 7 activity:

• "Each employee is expected to work in a cooperative manner with management/supervision, coworkers, customers and vendors."

And we concluded that the following rule was lawful, because employees would reasonably interpret it to apply to employer investigations of workplace misconduct rather than investigations of unfair labor practices or preparations for arbitration, when read in context with other provisions:

• "Each employee is expected to abide by Company policies and to cooperate fully in any investigation that the Company may undertake."

As previously discussed, the Board has made clear that it will not read rules in isolation. Even when a rule includes phrases or words that, alone, reasonably would be interpreted to ban protected criticism of the employer, if the context makes plain that only serious misconduct is banned, the rule will be found lawful. See Tradesmen International, 338 NLRB 460, 460-62 (2002). For instance, we found the following rule lawful based on a contextual analysis:

• "Being insubordinate, threatening, intimidating, disrespectful or assaulting a manager/supervisor, coworker, customer or vendor will result in" discipline.

Although a ban on being "disrespectful" to management, by itself, would ordinarily be found to unlawfully chill Section 7 criticism of the employer, the term here is contained in a larger provision that is clearly focused on serious misconduct, like insubordination, threats, and assault. Viewed in that context, we concluded that employees would not reasonably believe this rule to ban protected criticism.

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C. Employer Handbook Rules Regulating Conduct Towards Fellow Employees

In addition to employees' Section 7 rights to publicly discuss their terms and conditions of employment and to criticize their employer's labor policies, employees also have a right under the Act to argue and debate with each other about unions, management, and their terms and conditions of employment. These discussions can become contentious, but as the Supreme Court has noted, protected concerted speech will not lose its protection even if it includes "intemperate, abusive and inaccurate statements." Linn v. United Plant Guards, 383 U.S. 53 (1966). Thus, when an employer bans "negative" or "inappropriate" discussions among its employees, without further clarification, employees reasonably will read those rules to prohibit discussions and interactions that are protected under Section 7. See Triple Play Sports Bar & Grille, 361 NLRB No. 31, slip op. at 7 (Aug. 22, 2014); Hills & Dales General Hospital, 360 NLRB No. 70, slip op. at 1 (Apr. 1, 2014). For example, although employers have a legitimate and substantial interest in maintaining a harassment-free workplace, anti-harassment rules cannot be so broad that employees would reasonably read them as prohibiting vigorous debate or intemperate comments regarding Section 7-protected subjects.

Unlawful Employee-Employee Conduct Rules

We concluded that the following rules were unlawfully overbroad because employees would reasonably construe them to restrict protected discussions with their coworkers.

• "[D]on't pick fights" online.

We found the above rule unlawful because its broad and ambiguous language would reasonably be construed to encompass protected heated discussion among employees regarding unionization, the employer's labor policies, or the employer's treatment of employees.

• Do not make "insulting, embarrassing, hurtful or abusive comments about other company employees online," and "avoid the use of offensive, derogatory, or prejudicial comments."

Because debate about unionization and other protected concerted activity is often contentious and controversial, employees would reasonably read a rule that bans "offensive," "derogatory," "insulting," or "embarrassing" comments as limiting their ability to honestly discuss such subjects. These terms also would reasonably be construed to limit protected criticism of supervisors and managers, since they are also "company employees."

• "[S]how proper consideration for others' privacy and for topics that may be considered objectionable or inflammatory, such as politics and religion."

This rule was found unlawful because Section 7 protects communications about political matters, e.g., proposed right-to-work legislation. Its restriction on communications regarding controversial political matters, without clarifying context or examples, would be reasonably construed to cover these kinds of Section 7 communications. Indeed, discussion of unionization would also be chilled by such a rule because it can be an inflammatory topic similar to politics and religion.

• Do not send "unwanted, offensive, or inappropriate" e-mails.

The above rule is similarly vague and overbroad, in the absence of context or examples to clarify that it does not encompass Section 7 communications.

• "Material that is fraudulent, harassing, embarrassing, sexually explicit, profane, obscene, intimidating, defamatory, or otherwise unlawful or inappropriate may not be sent by e-mail. ..."

We found the above rule unlawful because several of its terms are ambiguous as to their application to Section 7 activity—"embarrassing," "defamatory," and "otherwise . . . inappropriate." We further concluded that, viewed in context with such language, employees would reasonably construe even the term "intimidating" as covering Section 7 conduct.

Lawful Employee-Employee Conduct Rules

On the other hand, when an employer's professionalism rule simply requires employees to be respectful to customers or competitors, or directs employees not to engage in unprofessional conduct, and does not mention the company or its management, employees would not reasonably believe that such a rule prohibits Section 7-protected criticism of the company. Accordingly, we concluded that the following rules were lawful:

• "Making inappropriate gestures, including visual staring."

• Any logos or graphics worn by employees "must not reflect any form of violent, discriminatory, abusive, offensive, demeaning, or otherwise unprofessional message."

• "[T]hreatening, intimidating, coercing, or otherwise interfering with the job performance of fellow employees or visitors."

• No "harassment of employees, patients or facility visitors."

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• No "use of racial slurs, derogatory comments, or insults."

With respect to the last example, we recognized that a blanket ban on "derogatory comments," by itself, would reasonably be read to restrict protected criticism of the employer. However, because this rule was in a section of the handbook that dealt exclusively with unlawful harassment and discrimination, employees reasonably would read it in context as prohibiting those kinds of unprotected comments toward coworkers, rather than protected criticism of the employer.

D. Employer Handbook Rules Regarding Employee Interaction with Third Parties

Another right employees have under Section 7 is the right to communicate with the news media, government agencies, and other third parties about wages, benefits, and other terms and conditions of employment. Handbook rules that reasonably would be read to restrict such communications are unlawfully overbroad. See Trump Marina Associates, 354 NLRB 1027, 1027 n.2 (2009), incorporated by reference, 355 NLRB 585 (2010), enforced mem., 435 F. App'x 1 (D.C. Cir. 2011). The most frequent offenders in this category are company media policies. While employers may lawfully control who makes official statements for the company, they must be careful to ensure that their rules would not reasonably be read to ban employees from speaking to the media or other third parties on their own (or other employees') behalf.

Unlawful Rules Regulating Third Party Communications

We found the following rules were unlawfully overbroad because employees reasonably would read them to ban protected communications with the media.

• Employees are not "authorized to speak to any representatives of the print and/or electronic media about company matters" unless designated to do so by HR, and must refer all media inquiries to the company media hotline.

We determined that the above rule was unlawful because employees would reasonably construe the phrase "company matters" to encompass employment concerns and labor relations, and there was no limiting language or other context in the rule to clarify that the rule applied only to those speaking as official company representatives.

• "[A]ssociates are not authorized to answer questions from the news media. .. . When approached for information, you should refer the person to [the Employer's] Media Relations Department."

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• "[A]ll inquiries from the media must be referred to the Director of Operations in the corporate office, no exceptions."

These two rules contain blanket restrictions on employees' responses to media inquiries. We therefore concluded that employees would reasonably understand that they apply to all media contacts, not only inquiries seeking the employers' official positions.

In addition, we found the following rule to be unlawfully overbroad because employees reasonably would read it to limit protected communications with government agencies.

• "If you are contacted by any government agency you should contact the Law Department immediately for assistance."

Although we recognize an employer's right to present its own position regarding the subject of a government inquiry, this rule contains a broader restriction. Employees would reasonably believe that they may not speak to a government agency without management approval, or even provide information in response to a Board investigation.

Lawful Rules Regulating Employee Communications with Outside Parties

In contrast, we found the following media contact rules to be lawful because employees reasonably would interpret them to mean that employees should not speak on behalf of the company, not that employees cannot speak to outsiders on their own (or other employees') behalf.

• "The company strives to anticipate and manage crisis situations in order to reduce disruption to our employees and to maintain our reputation as a high quality company. To best serve these objectives, the company will respond to the news media in a timely and professional manner only through the designated spokespersons."

We determined that this rule was lawful because it specifically referred to employee contact with the media regarding non-Section 7 related matters, such as crisis situations; sought to ensure a consistent company response or message regarding those matters; and was not a blanket prohibition against all contact with the media. Accordingly, we concluded that employees would not reasonably interpret this rule as interfering with Section 7 communications.

• "Events may occur at our stores that will draw immediate attention from the news media. It is imperative that one person speaks for the Company to deliver an appropriate message and to avoid giving misinformation in any media inquiry. VVhile reporters frequently shop as customers and may ask questions about a matter, good

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reporters identify themselves prior to asking questions. Every . . . employee is expected to adhere to the following media policy: . .. 2. Answer all media/reporter questions like this: 'I am not authorized to comment for [the Employer] (or I don't have the information you want). Let me have our public affairs office contact you."

We concluded that the prefatory language in this rule would cause employees to reasonably construe the rule as an attempt to control the company's message, rather than to restrict Section 7 communications to the media. Further, the required responses to media inquiries would be non-sequiturs in the context of a discussion about terms and conditions of employment or protected criticism of the company. Accordingly, we found that employees reasonably would not read this rule to restrict conversations with the news media about protected concerted activities.

E. Employer Handbook Rules Restricting Use of Company Logos, Copyrights, and Trademarks

We have also reviewed handbook rules that restrict employee use of company logos, copyrights, or trademarks. Though copyright holders have a clear interest in protecting their intellectual property, handbook rules cannot prohibit employees' fair protected use of that property. See Pepsi-Cola Bottling Co., 301 NLRB 1008, 1019-20 (1991), enforced mem., 953 F.2d 638 (4th Cir. 1992). For instance, a company's name and logo will usually be protected by intellectual property laws, but employees have a right to use the name and logo on picket signs, leaflets, and other protest material. Employer proprietary interests are not implicated by employees' non-commercial use of a name, logo, or other trademark to identify the employer in the course of Section 7 activity. Thus, a broad ban on such use without any clarification will generally be found unlawfully overbroad.

Unlawful Rules Banning Employee Use of Logos, Copyrights, or Trademarks

We found that the following rules were unlawful because they contain broad restrictions that employees would reasonably read to ban fair use of the employer's intellectual property in the course of protected concerted activity.

• Do "not use any Company logos, trademarks, graphics, or advertising materials" in social media.

• Do not use "other people's property," such as trademarks, without permission in social media.

• "Use of [the Employer's] name, address or other information in your personal profile [is banned].. . . In addition, it is prohibited to use [the Employer's] logos, trademarks or any other copyrighted material."

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• "Company logos and trademarks may not be used without written consent ...."

Lawful Rules Protecting Employer Logos, Copyrights, and Trademarks

We found that the following rules were lawful. Unlike the prior examples, which broadly ban employee use of trademarked or copyrighted material, these rules simply require employees to respect such laws, permitting fair use.

• "Respect all copyright and other intellectual property laws. For [the Employer's] protection as well as your own, it is critical that you show proper respect for the laws governing copyright, fair use of copyrighted material owned by others, trademarks and other intellectual property, including [the Employer's] own copyrights, trademarks and brands."

• "DO respect the laws regarding copyrights, trademarks, rights of publicity and other third-party rights. To minimize the risk of a copyright violation, you should provide references to the source(s) of information you use and accurately cite copyrighted works you identify in your online communications. Do not infringe on [Employer] logos, brand names, taglines, slogans, or other trademarks."

F. Employer Handbook Rules Restricting Photography and Recording

Employees also have a Section 7 right to photograph and make recordings in furtherance of their protected concerted activity, including the right to use personal devices to take such pictures and recordings. See Hawaii Tribune-Herald, 356 NLRB No. 63, slip op. at 1 (Feb. 14, 2011), enforced sub nom. Stephens Media, LLC v. NLRB, 677 F.3d 1241 (D.C. Cir. 2012); White Oak Manor, 353 NLRB 795, 795 (2009), incorporated by reference, 355 NLRB 1280 (2010), enforced mem., 452 F. App'x 374 (4th Cir. 2011). Thus, rules placing a total ban on such photography or recordings, or banning the use or possession of personal cameras or recording devices, are unlawfully overbroad where they would reasonably be read to prohibit the taking of pictures or recordings on non-work time.

Unlawful Rules Banning Photography, Recordings, or Personal Electronic Devices

We found the following rules unlawfully overbroad because employees reasonably would interpret them to prohibit the use of personal equipment to engage in Section 7 activity while on breaks or other non-work time.

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• "Taking unauthorized pictures or video on company property" is prohibited.

We concluded that employees would reasonably read this rule to prohibit all unauthorized employee use of a camera or video recorder, including attempts to document health and safety violations and other protected concerted activity.

• "No employee shall use any recording device including but not limited to, audio, video, or digital for the purpose of recording any [Employer] employee or [Employer] operation.. .."

We found this rule unlawful because employees would reasonably construe it to preclude, among other things, documentation of unfair labor practices, which is an essential part of the recognized right under Section 7 to utilize the Board's processes.

• A total ban on use or possession of personal electronic equipment on Employer property.

• A prohibition on personal computers or data storage devices on employer property.

We determined that the two above rules, which contain blanket restrictions on use or possession of recording devices, violated the Act for similar reasons. Although an employer has a legitimate interest in maintaining the confidentiality of business records, these rules were not narrowly tailored to address that concern.

• Prohibition from wearing cell phones, making personal calls or viewing or sending texts "while on duty."

This rule, which limits the restriction on personal recording devices to time "on duty," is nonetheless unlawful, because employees reasonably would understand "on duty" to include breaks and meals during their shifts, as opposed to their actual work time.

Lawful Rules Regulating Pictures and Recording Equipment

Rules regulating employee recording or photography will be found lawful if their scope is appropriately limited. For instance, in cases where a no-photography rule is instituted in response to a breach of patient privacy, where the employer has a well-understood, strong privacy interest, the Board has found that employees would not reasonably understand a no-photography rule to limit pictures for protected concerted purposes. See Flagstaff Medical Center, 357 NLRB No. 65, slip op. at 5 (Aug. 26, 2011), enforced in relevant part, 715 F.3d 928 (D.C. Cir. 2013). We also found the following rule lawful based on a contextual analysis:

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• No cameras are to be allowed in the store or parking lot without prior approval from the corporate office.

This rule was embedded in a lawful media policy and immediately followed instructions on how to deal with reporters in the store. We determined that, in such a context, employees would read the rule to ban news cameras, not their own cameras.

G. Employer Handbook Rules Restricting Employees from Leaving Work

One of the most fundamental rights employees have under Section 7 of the Act is the right to go on strike. Accordingly, rules that regulate when employees can leave work are unlawful if employees reasonably would read them to forbid protected strike actions and walkouts. See Purple Communications, Inc., 361 NLRB No. 43, slip op. at 2 (Sept. 24, 2014). If, however, such a rule makes no mention of "strikes," "walkouts," "disruptions," or the like, employees will reasonably understand the rule to pertain to employees leaving their posts for reasons unrelated to protected concerted activity, and the rule will be found lawful. See 2 Sisters Food Group, 357 NLRB No. 168, slip op. at 2 (Dec. 29, 2011).

Unlawful Handbook Rules Relating to Restrictions on Leaving Work

We found the following rules were unlawful because they contain broad prohibitions on walking off the job, which reasonably would be read to include protected strikes and walkouts.

• "Failure to report to your scheduled shift for more than three consecutive days without prior authorization or 'walking off the job' during a scheduled shift" is prohibited.

• "Walking off the job ..." is prohibited.

Lawful Handbook Rules Relating to Restrictions on Leaving Work

In contrast, the following handbook rule was considered lawful:

• "Entering or leaving Company property without permission may result in discharge."

We found this rule was lawful because, in the absence of terms like "work stoppage" or "walking off the job," a rule forbidding employees from leaving the employer's property during work time without permission will not reasonably be read to encompass strikes. However, the portion of the rule that requires employees to

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obtain permission before entering the property was found unlawful because employers may not deny off-duty employees access to parking lots, gates, and other outside nonworking areas except where sufficiently justified by business reasons or pursuant to the kind of narrowly tailored rule approved in Tr-County Medical Center, 222 NLRB 1089, 1089 (1976).

• "Walking off shift, failing to report for a scheduled shift and leaving early without supervisor permission are also grounds for immediate termination."

Although this rule includes the term "walking off shift," which usually would be considered an overbroad term that employees reasonably would understand to include strikes, we found this rule to be lawful in the context of the employees' health care responsibilities. Where employees are directly responsible for patient care, a broad "no walkout without permission" rule is reasonably read as ensuring that patients are not left without adequate care, not as a complete ban on strikes. See Wilshire at Lakewood, 343 NLRB 141, 144 (2004), vacated in part, 345 NLRB 1050 (2005), enforcement denied on other grounds, Jochims v. NLRB, 480 F.3d 1161 (D.C. Cir. 2007). This rule was maintained by an employer that operated a care facility for people with dementia. Thus, we found that employees would reasonably read this rule as being designed to ensure continuity of care, not as a ban on protected job actions.

H. Employer Conflict-of-Interest Rules

Section 7 of the Act protects employees' right to engage in concerted activity to improve their terms and conditions of employment, even if that activity is in conflict with the employer's interests. For instance, employees may protest in front of the company, organize a boycott, and solicit support for a union while on nonwork time. See HTH Corp., 356 NLRB No. 182, slip op. at 2, 25 (June 14, 2011), enforced, 693 F.3d 1051 (9th Cir. 2012). If an employer's conflict-of-interest rule would reasonably be read to prohibit such activities, the rule will be found unlawful. However, where the rule includes examples or otherwise clarifies that it is limited to legitimate business interests, employees will reasonably understand the rule to prohibit only unprotected activity. See Tradesmen International, 338 NLRB 460, 461-62 (2002).

Unlawful Conflict-of-Interest Rules

We found the following rule unlawful because it was phrased broadly and did not include any clarifying examples or context that would indicate that it did not apply to Section 7 activities:

• Employees may not engage in "any action" that is "not in the best interest of [the Employer]."

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Lawful Conflict-of-Interest Rules

In contrast, we found the following rules lawful because they included context and examples that indicated that the rules were not meant to encompass protected concerted activity:

• Do not "give, offer or promise, directly or indirectly, anything of value to any representative of an Outside Business," where "Outside Business" is defined as "any person, firm, corporation, or government agency that sells or provides a service to, purchases from, or competes with [the Employer]." Examples of violations include "holding an ownership or financial interest in an Outside Business" and "accepting gifts, money, or services from an Outside Business."

We concluded that this rule is lawful because employees would reasonably understand that the rule is directed at protecting the employer from employee graft and preventing employees from engaging in a competing business, and that it does not apply to employee interactions with labor organizations or other Section 7 activity that the employer might oppose.

• As an employee, "I will not engage in any activity that might create a conflict of interest for me or the company," where the conflict of interest policy devoted two pages to examples such as "avoid outside employment with a[n Employer] customer, supplier, or competitor, or having a significant financial interest with one of these entities."

The above rule included multiple examples of conflicts of interest such that it would not be interpreted to restrict Section 7 activity.

• Employees must refrain "from any activity or having any financial interest that is inconsistent with the Company's best interest" and also must refrain from "activities, investments or associations that compete with the Company, interferes with one's judgment concerning the Company's best interests, or exploits one's position with the Company for personal gains."

We also found this rule to be lawful based on a contextual analysis. While its requirement that employees refrain from activities or associations that are inconsistent with the company's best interests could, in isolation, be interpreted to include employee participation in unions, the surrounding context and examples ensure that employees would not reasonably read it in that way. Indeed, the rule is in a section of the handbook that deals entirely with business ethics and includes requirements to act with "honesty, fairness and integrity"; comply with "all laws,

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rules and regulations"; and provide "accurate, complete, fair, timely, and understandable" information in SEC filings.

Part 2: The Settlement with Wendy's International LLC

In 2014, we concluded that many of the employee handbook rules alleged in an unfair labor practice charge against Wendy's International, LLC were unlawfully overbroad under Lutheran Heritage's first prong. Pursuant to an informal, bilateral Board settlement agreement, Wendy's modified its handbook rules. This section of the report presents the rules we found unlawfully overbroad, with brief discussions of our reasoning, followed by the replacement rules, which the Office of the General Counsel considers lawful, contained in the settlement agreement.

A. Wendy's Unlawful Handbook Rules

The pertinent provisions of Wendy's handbook and our conclusions are outlined below.

Handbook disclosure provision

No part of this handbook may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or information storage and retrieval system or otherwise, for any purpose without the express written permission of Wendy's International, Inc. The information contained in this handbook is considered proprietary and confidential information of Wendy's and its intended use is strictly limited to Wendy's and its employees. The disclosure of this handbook to unauthorized parties is prohibited. Making an unauthorized disclosure of this handbook is a serious breach of Wendy's standards of conduct and ethics and shall expose the disclosing party to disciplinary action and other liabilities as permitted under law.

We concluded that this provision was unlawful because it prohibited disclosure of the Wendy's handbook, which contains employment policies, to third parties such as union representatives or the Board. Because employees have a Section 7 right to discuss their wages and other terms and conditions of employment with others, including co-workers, union representatives, and government agencies, such as the Board, a rule that precludes employees from sharing the employee handbook that contains many of their working conditions violates Section 8(a)(1).

Social Media Policy

Refrain from commenting on the company's business, financial performance, strategies, clients, policies, employees or competitors in any

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social media, without the advance approval of your supervisor, Human Resources and Communications Departments. Anything you say or post may be construed as representing the Company's opinion or point of view (when it does not), or it may reflect negatively on the Company. If you wish to make a complaint or report a complaint or troubling behavior, please follow the complaint procedure in the applicable Company policy (e.g., Speak Out).

Although employers have a legitimate interest in ensuring that employee communications are not construed as misrepresenting the employer's official position, we concluded that this rule did not merely prevent employees from speaking on behalf of, or in the name of, Wendy's. Instead, it generally prohibited an employee from commenting about the Company's business, policies, or employees without authorization, particularly when it might reflect negatively on the Company. Accordingly, we found that this part of the rule was overly broad. We also concluded that the rule's instruction that employees should follow the Company's internal complaint mechanism to "make a complaint or report a complaint" chilled employees' Section 7 right to communicate employment-related complaints to persons and entities other than Wendy's.

Respect copyrights and similar laws. Do not use any copyrighted or otherwise protected information or property without the owner's written consent.

We concluded that this rule was unlawfully overbroad because it broadly prohibited any employee use of copyrighted or "otherwise protected" information. Employees would reasonably construe that language to prohibit Section 7 communications involving, for example, reference to the copyrighted handbook or Company website for purposes of commentary or criticism, or use of the Wendy's trademark/name and another business's trademark/name in a wage comparison. We determined that such use does not implicate the interests that courts have identified as being protected by trademark and copyright laws.

[You may not co] ost photographs taken at Company events or on Company premises without the advance consent of your supervisor, Human Resources and Communications Departments. [You may not Most photographs of Company employees without their advance consent. Do not attribute or disseminate comments or statements purportedly made by employees or others without their explicit permission.

We concluded that these rules, which included no examples of unprotected conduct or other language to clarify and restrict their scope, would chill employees

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from engaging in Section 7 activities, such as posting a photo of employees carrying a picket sign in front of a restaurant, documenting a health or safety concern, or discussing or making complaints about statements made by Wendy's or fellow employees.

[You may not u]se the Company's (or any of its affiliated entities) logos, marks or other protected information or property without the Legal Department's express written authorization.

As discussed above, Wendy's had no legitimate basis to prohibit the use of its logo or trademarks in this manner, which would reasonably be construed to restrict a variety of Section 7-protected uses of the Wendy's logo and trademarks. Therefore, we found this rule unlawfully overbroad.

[You may not e]mail, post, comment or blog anonymously. You may think it is anonymous, but it is most likely traceable to you and the Company.

Requiring employees to publicly self-identify in order to participate in protected activity imposes an unwarranted burden on Section 7 rights. Thus, we found this rule banning anonymous comments unlawfully overbroad.

[You may not m]ake false or misleading representations about your credentials or your work.

We found this rule unlawful, because its language clearly encompassed communications relating to working conditions, which do not lose their protection if they are false or misleading as opposed to "maliciously false" (i.e., made with knowledge of falsity or reckless disregard for the truth). A broad rule banning merely false or misleading representations about work can have a chilling effect by causing employees to become hesitant to voice their views and complaints concerning working conditions for fear that later they may be disciplined because someone may determine that those were false or misleading statements.

[You may not c]reate a blog or online group related to your job without the advance approval of the Legal and Communications.

We determined that this no-blogging rule was unlawfully overbroad because employees have a Section 7 right to discuss their terms and conditions of employment with their co-workers and/or the public, including on blogs or online groups, and it is well-settled that such pre-authorization requirements chill Section 7 activity.

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Do Not Disparage: Be thoughtful and respectful in all your communications and dealings with others, including email and social media. Do not harass, threaten, libel, malign, defame, or disparage fellow professionals, employees, clients, competitors or anyone else. Do not make personal insults, use obscenities or engage in any conduct that would be unacceptable in a professional environment.

We found this rule unlawful because its second and third sentences contained broad, sweeping prohibitions against "malign[ing], defam[ing], or disparag[ing]" that, in context, would reasonably be read to go beyond unprotected defamation and encompass concerted communications protesting or criticizing Wendy's treatment of employees, among other Section 7 activities. And, there was nothing in the rule or elsewhere in the handbook that would reasonably assure employees that Section 7 communications were excluded from the rule's broad reach.

Do Not Retaliate: If you discover negative statements, emails or posts about you or the Company, do not respond. First seek help from the Legal and Communications Departments, who will guide any response.

We concluded that employees would reasonably read this rule as requiring them to seek permission before engaging in Section 7 activity because "negative statements about. . . the Company" would reasonably be construed as encompassing Section 7 activity. For example, employees would reasonably read the rule to require that they obtain permission from Wendy's before responding to a co-worker's complaint about working conditions or a protest of unfair labor practices. We therefore found this rule overly broad.

Conflict-of-Interest Provision

Because you are now working in one of Wendy's restaurants, it is important to realize that you have an up close and personal look at our business every day. With this in mind, you should recognize your responsibility to avoid any conflict between your personal interests and those of the Company. A conflict of interest occurs when our personal interests interfere—or appear to interfere—with our ability to make sound business decisions on behalf of Wendy's.

We determined that the Conflict-of-Interest provision was unlawfully overbroad because its requirement that employees avoid "any conflict between your personal interests and those of the Company" would reasonably be read to encompass Section 7 activity, such as union organizing activity, demanding higher

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wages, or engaging in boycotts or public demonstrations related to a labor dispute. Unlike rules that provide specific examples of what constitutes a conflict of interest, nothing in this rule confined its scope to legitimate business concerns or clarified that it was not intended to apply to Section 7 activity.

Moreover, we concluded that the Conflict-of-Interest provision was even more likely to chill Section 7 activity when read together with the handbook's third-party representation provision, located about six pages later, which communicated that unions are not beneficial or in the interest of Wendy's: [b]ecause Wendy's desires to maintain open and direct communications with all of our employees, we do not believe that third party/union involvement in our relationship would benefit our employees or Wendy's.

Company Confidential Information Provision

During the course of your employment, you may become aware of confidential information about Wendy's business. You must not disclose any confidential information relating to Wendy's business to anyone outside of the Company. Your employee PIN and other personal information should be kept confidential. Please don't share this information with any other employee.

We concluded that the confidentiality provision was facially unlawful because it referenced employees' "personal information," which the Board has found would reasonably be read to encompass discussion of wages, hours, and terms and conditions of employment.

Employee Conduct

The Employee Conduct section of the handbook contained approximately two pages listing examples of "misconduct" and "gross misconduct," which could lead to disciplinary action, up to and including discharge, in the sole discretion of Wendy's. The list included the following:

Soliciting, collecting funds, distributing literature on Company premises without proper approvals or outside the guidelines established in the "No Solicitation/No Distribution" Policy.

The blanket prohibition against soliciting, collecting funds, or distributing literature without proper approvals was unlawfully overbroad because employees have a Section 7 right to solicit on non-work time and distribute literature in non-work areas.

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Walking off the job without authorization.

We found that this rule was unlawfully overbroad because employees would reasonably construe it to prohibit Section 7 activity such as a concerted walkout or other strike activity. As discussed in Part 1 of this report, the Board has drawn a fairly bright line regarding how employees would reasonably construe rules about employees leaving work. Rules that contain phrases such as "walking off the job," as here, reasonably would be read to forbid protected strike actions and walkouts.

Threatening, intimidating, foul or inappropriate language.

We found this prohibition to be unlawful because rules that forbid the vague phrase "inappropriate language," without examples or context, would reasonably be construed to prohibit protected communications about or criticism of management, labor policies, or working conditions.

False accusations against the Company and/or against another employee or customer.

We found this rule unlawful because an accusation against an employer does not lose the protection of Section 7 merely because it is false, as opposed to being recklessly or knowingly false. As previously discussed, a rule banning merely false statements can have a chilling effect on protected concerted communications, for instance, because employees reasonably would fear that contradictory information provided by the employer would result in discipline.

No Distribution/No Solicitation Provision

[I]t is our policy to prohibit the distribution of literature in work areas and to prohibit solicitation during employees' working time. "VVorking time" is the time an employee is engaged, or should be engaged, in performing his/her work tasks for Wendy's. These guidelines also apply to solicitation and/or distribution by electronic means.

We concluded that this rule was unlawful because it restricted distribution by electronic means in work areas. While an employer may restrict distribution of literature in paper form in work areas, it has no legitimate business justification to restrict employees from distributing literature electronically, such as sending an email with a "flyer" attached, while the employees are in work areas during non-working time. Unlike distribution of paper literature, which can create a production hazard even when it occurs on nonworking time, electronic distribution does not

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produce litter and only impinges on the employer's management interests if it occurs on working time.

Restaurant Telephone; Cell Phone; Camera Phone/Recording Devices Provision

Due to the potential for issues such as invasion of privacy, sexual harassment, and loss of productivity, no Crew Member may operate a camera phone on Company property or while performing work for the Company. The use of tape recorders, Dictaphones, or other types of voice recording devices anywhere on Company property, including to record conversations or activities of other employees or management, or while performing work for the Company, is also strictly prohibited, unless the device was provided to you by the Company and is used solely for legitimate business purposes.

We concluded that this rule, which prohibited employee use of a camera or video recorder "on Company property" at any time, precluded Section 7 activities, such as employees documenting health and safety violations, collective action, or the potential violation of employee rights under the Act. Wendy's had no business justification for such a broad prohibition. Its concerns about privacy, sexual harassment, and loss of productivity did not justify a rule that prohibited all use of a camera phone or audio recording device anywhere on the company's property at any time.

B. Wendy's Lawful Handbook Rules Pursuant to Settlement Agreement

Handbook Disclosure Provision

This Crew Orientation Handbook. . . is the property of Wendy's International LLC. No part of this handbook may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or information storage and retrieval system or otherwise, for any business/commercial venture without the express written permission of Wendy's International, LLC. The information contained in this handbook is strictly limited to use by Wendy's and its employees. The disclosure of this handbook to competitors is prohibited. Making an unauthorized disclosure of this handbook is a serious breach of Wendy's standards of conduct and ethics and shall expose the disclosing party to disciplinary action and other liabilities as permitted under law.

Social Media Provision

• Do not comment on trade secrets and proprietary Company information (business, financial and marketing strategies) without the advance approval of your supervisor, Human Resources and Communications Departments.

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• Do not make negative comments about our customers in any social media.

• Use of social media on Company equipment during working time is permitted, if your use is for legitimate, preapproved Company business. Please discuss the nature of your anticipated business use and the content of your message with your supervisor and Human Resources. Obtain their approval prior to such use.

• Respect copyright, trademark and similar laws and use such protected information in compliance with applicable legal standards.

Restrictions:

YOU MAY NOT do any of the following:

• Due to the potential for issues such as invasion of privacy (employee and customer), sexual or other harassment (as defined by our harassment /discrimination policy), protection of proprietary recipes and preparation techniques, Crew Members may not take, distribute, or post pictures, videos, or audio recordings while on working time. Crew Members also may not take pictures or make recordings of work areas. An exception to the rule concerning pictures and recordings of work areas would be to engage in activity protected by the National Labor Relations Act including, for example, taking pictures of health, safety and/or working condition concerns or of strike, protest and work-related issues and/or other protected concerted activities.

• Use the Company's (or any of its affiliated entities) logos, marks or other protected information or property for any business/commercial venture without the Legal Department's express written authorization.

• Make knowingly false representations about your credentials or your work.

• Create a blog or online group related to Wendy's (not including blogs or discussions involving wages, benefits, or other terms and conditions of employment, or protected concerted activity) without the advance approval of the Legal and Communications Departments. If a blog or online group is approved, it must contain a disclaimer approved by the Legal Department.

Do Not Violate the Law and Related Company Policies:

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Be thoughtful in all your communications and dealings with others, including email and social media. Never harass (as defined by our anti-harassment policy), threaten, libel or defame fellow professionals, employees, clients, competitors or anyone else. In general, it is always wise to remember that what you say in social media can often be seen by anyone. Accordingly, harassing comments, obscenities or similar conduct that would violate Company policies is discouraged in general and is never allowed while using Wendy's equipment or during your working time.

Discipline: All employees are expected to know and follow this policy. Nothing in this policy is, however, intended to prevent employees from engaging in concerted activity protected by law. If you have any questions regarding this policy, please ask your supervisor and Human Resources before acting. Any violations of this policy are grounds for disciplinary action, up to and including immediate termination of employment.

Conflict of Interest Provision

Because you are now working in one of Wendy's restaurants, it is important to realize that you have an up close and personal look at our business every day. With this in mind, you should recognize your responsibility to avoid any conflict between your personal interests and those of the Company. A conflict of interest occurs when our personal interests interfere — or appear to interfere — with your ability to make sound business decisions on behalf of Wendy's. There are some common relationships or circumstances that can create, or give the appearance of, a conflict of interest. The situations generally involve gifts and business or financial dealings or investments. Gifts, favors, tickets, entertainment and other such inducements may be attempts to ((purchase" favorable treatment. Accepting such inducements could raise doubts about an employee's ability to make independent business judgments and the Company's commitment to treating people fairly. In addition, a conflict of interest exists when employees have a financial or ownership interest in a business or financial venture that may be at variance with the interests of Wendy's. Likewise, when an employee engages in business transactions that benefit family members, it may give an appearance of impropriety.

Company Confidential Information Provision

During the course of your employment, you may become aware of trade secrets and similarly protected proprietary and confidential information

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about Wendy's business (e.g. recipes, preparation techniques, marketing plans and strategies, financial records). You must not disclose any such information to anyone outside of the Company. Your employee PIN and other similar personal identification information should be kept confidential. Please don't share this information with any other employee.

Employee Conduct Provision

• Soliciting, collecting funds, distributing literature on Company premises outside the guidelines established in the "No Solicitation/No Distribution" Policy.

• Leaving Company premises during working shift without permission of management.

• Threatening, harassing (as defined by our harassment/discrimination policy), intimidating, profane, obscene or similar inappropriate language in violation of Company policy.

• Making knowingly false accusations against the Company and/or against another employee, customer or vendor.

No Distribution/No Solicitation Provision

Providing the most ideal work environment possible is very important to Wendy's. We hope you feel very comfortable and at ease when you're here at work. Therefore, to protect you and our customers from unnecessary interruptions and annoyances, it is our policy to prohibit the distribution of literature in work areas and to prohibit solicitation and distribution of literature during employees' working time. "Working Time" is the time an employee is engaged or should be engaged in performing his/her work tasks for Wendy's. These guidelines also apply to solicitation by electronic means. Solicitation or distribution of any kind by non-employees on Company premises is prohibited at all times. Nothing in this section prohibits employees from discussing terms and conditions of employment.

Restaurant Telephone/ Cell Phone/Camera Phone/Recording Devices Provision

Due to the potential for issues such as invasion of privacy (employee and customer), sexual or other harassment (as defined by our harassment /discrimination policy), protection of proprietary recipes and preparation techniques, Crew Members may not take, distribute, or post pictures, videos, or audio recordings while on working time. Crew Members also may not take pictures or make recordings of work areas. An exception to the rule concerning pictures and recordings of work areas would be to engage in

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activity protected by the National Labor Relations Act including, for example, taking pictures of health, safety and/or working condition concerns or of strike, protest and work-related issues and/or other protected concerted activities.